Residential property loans now capped at 35-year tenure

See what other rules MAS has concocted to thwart still-rising housing prices.

"The Monetary Authority of Singapore's move is part of the Government’s broader aim of avoiding a price bubble and fostering long term stability in the property market," MAS, Singapore's central bank, said in a release.

The central bank announced that the maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats. The new rules will take effect from 6 October 2012.

The new rules will apply to loans to both individual and non-individual borrowers, as well as refinancing loans.

MAS explained that long tenure loans fuel property prices, so "the new rules aim to curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth."

In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if the tenure exceeds 30 years; or the loan period extends beyond the retirement age of 65 years.

For these loans, the LTV limit will be:40% for a borrower with one or more outstanding residential property
loans; and 60% for a borrower with no outstanding residential property loan.  

MAS will also lower the LTV ratio for residential property loans to nonindividual borrowers from 50% to 40%